UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20552

                                   ----------

                                    FORM 10-K

(Mark One)
[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the fiscal year ended    September 30, 2001
                          ----------------------------------------
                                                         OR
[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the transition period from ________ to ________

                        Commission file number 000-22817
                                                               -------------

                         HARBOR FLORIDA BANCSHARES, INC.
             (Exact name of registrant as specified in its charter)

               DELAWARE                                 65-0813766
----------------------------------------        -------------------------
   (State or other jurisdiction                 (I.R.S. employer
 of incorporation or organization)              identification no.)

                              100 S. SECOND STREET
                              FORT PIERCE, FL 34950
                    (Address of principal executive offices)
                                   (ZIP code)

Registrant's telephone number, including area code   (561) 461-2414
                                                  --------------------

Securities registered pursuant to Section 12(b) of the Act:

                                      None

Securities registered pursuant to Section 12(g) of the Act:

                         Common Stock (par value $0.10)
-------------------------------------------------------------------------------
                                (Title of class)

--------------------------------------------------------------------------------
                                (Title of class)


<PAGE>



     Indicate by check mark  whether the  registrant:  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. Yes         X No
                                          ----------- -------------

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [ ]

         The aggregate market value of the voting stock held by non-affiliates
of the Registrant computed by reference to the average bid and asked price of
the common stock as of December 7, 2001 ($16.23) was $393,978,641.

         The number of shares of common stock outstanding on December 7, 2001
was 24,274,716.


         Documents incorporated by reference:

Parts II and IV of Form 10-K

         Annual Report to Shareholders for the fiscal year ended September 30,
2001. With the exception of those portions which are incorporated by reference
in this Form 10-K Annual Report, the 2001 Annual Report to Shareholders is not
deemed to be filed as part of this report.

Part III of Form 10-K

         Proxy Statement for the 2001 Annual Meeting of Shareholders.



<PAGE>



                                TABLE OF CONTENTS



Item                                                               Page
 No.                                                                No.
 ---                                                                ---

           Part I

  1        Business........................................................4

  2        Properties.....................................................21

  3        Legal Proceedings..............................................24

  4        Submission of Matters to a Vote of Security-Holders............24

           Part II

  5        Market for Registrant's Common Equity and
           Related Stockholder Matters....................................24

  6        Selected Financial Data........................................25

  7        Management's Discussion and Analysis of Financial
           Condition and Results of Operations............................25

 7A        Quantitative and Qualitative Disclosures about Market
           Risk...........................................................25

  8        Financial Statements and Supplementary Data....................25

  9        Changes in and Disagreements with Accountants on
           Accounting and Financial Disclosure............................25

           Part III

 10        Directors and Executive Officers of the Registrant.............26

 11        Executive Compensation.........................................26

 12        Security Ownership of Certain Beneficial
           Owners and Management..........................................26

 13        Certain Relations and Related Transactions.....................26

           Part IV

 14        Exhibits, Financial Statement Schedules, and Reports on Form
           8-K............................................................27


<PAGE>



                                     PART I

Item 1.  Business

General

       Harbor Florida Bancshares, Inc., (the "Company" or "Bancshares"), is a
Delaware corporation organized in 1998 and is the holding company for Harbor
Federal Savings Bank (the "Bank"), a federally chartered savings bank. The Bank
was founded in 1934 as a federally chartered savings institution. The Company
owns 100% of the Bank's common stock. Currently, it engages in no other
significant activities beyond its ownership of the Bank's common stock.
Consequently, its net income is derived from the Bank. The Bank provides a wide
range of banking services and is engaged in the business of attracting deposits
primarily from the communities it serves and using these and other funds to
originate primarily one-to-four family first mortgage loans.

       Prior to March 18, 1998, the Company's predecessor entity, Harbor Florida
Bancorp, Inc. ("Bancorp"), was owned approximately 53.37% by Harbor Financial
M.H.C. ("Mutual Holding Company") and 46.63% by public shareholders. On March
18, 1998, pursuant to a plan of conversion and reorganization, and after a
series of transactions: (1) Bancshares was formed and became the surviving
corporate entity, (2) Bancshares sold the ownership interest in Bancorp
previously held by the Mutual Holding Company to the public in a subscription
offering (the "Offering") (16,586,752 common shares at $10.00 resulting in net
cash proceeds after costs and funding the ESOP of approximately $150 million),
(3) previous public shareholders of Bancorp had their shares exchanged into
14,112,400 common shares of Bancshares (exchange ratio of 6.0094 to 1) (the
"Exchange"), and (4) the Mutual Holding Company ceased to exist. The total
number of shares of common stock outstanding following the Offering and Exchange
was 30,699,152. The reorganization was accounted for in a manner similar to a
pooling of interests and did not result in any significant accounting
adjustments. As a result of the reorganization, the consolidated financial
statements for prior periods have been restated to reflect the changes in the
par value of common stock from $.01 to $.10 per share and in the number of
authorized shares of common stock from 13,000,000 to 70,000,000.

Market Area

         The Company serves communities in six growing and diverse Florida
counties. Its headquarters are in Fort Pierce, Florida, located on the eastern
coast of Florida between Stuart and Daytona Beach. In addition to its
headquarters, it has sixteen branch offices and two insurance agency offices in
St. Lucie, Indian River and Martin counties, located on Florida's "Treasure
Coast." This area is characterized by both a large retirement and vacation home
population and a significant agricultural economy, primarily citrus crops. The
Company has seven branch offices located in Brevard County, which encompasses
the "Space Coast" of the state. Brevard County has an industrial base fueled
primarily by companies related to NASA and the John F. Kennedy Space Center.
Prominent electronics concerns such as Harris Corporation are also major
employers in this area. The Company also has one branch office in Okeechobee
County, a rural, agricultural area, and six branch offices in Volusia County,
where tourism and a large retirement population predominate.

Lending Activities

         General. The Company's principal activity has historically been, and
will continue to be for the foreseeable future, the origination of one-to-four
family residential mortgage loans. The Company sells conforming loans, primarily
to the Federal National Mortgage Association ("FNMA"), and has, on rare
occasions, purchased whole loans and loan participations, but it primarily
focuses on the origination of loans and retains them in its portfolio for
investment. See " -- Lending Activities -- One to Four Family Permanent
Residential Mortgage Loans" below. The Company also originates one-to-four
family residential construction and consumer loans, and consumer installment,
commercial real estate and commercial business loans. Substantially all of the
Company's mortgage loans are secured by property in its market area and
substantially all of its other loans are made to borrowers in its market area.

         The Company offers both fixed-rate and adjustable rate mortgage ("ARM")
loans. The Company has sought to increase its origination of ARM loans to reduce
its interest rate risk. However, the Company's ability to originate ARM loans
has been limited by borrower preference for fixed-rate loans.


<PAGE>



         Loan and Mortgage - Backed Securities Portfolio Composition. The
following table sets forth a summary of the composition of the Company's loan
and mortgage-backed securities portfolio by type of loan at the dates indicated.
<TABLE>
<CAPTION>
                                                                           At September 30,
                            -----------------------------------------------------------------------------------------------------
                                    2001                 2000                 1999               1998                  1997
                                    -----                -----                -----              -----                 ----
                                        Percent              Percent              Percent            Percent              Percent
                                           of                  of                   of                 of                  of
                              Amount     Total    Amount      Total     Amount     Total    Amount    Total    Amount     Total
                              -------    ------   -------   --------    -------  --------   ------- --------   ------   -------
                                                                     (Dollars in thousands)
<S>                          <C>         <C>      <C>         <C>      <C>         <C>     <C>         <C>       <C>         <C>
Mortgage Loans
 Construction 1 - 4 Family.   $119,648    7.95%    $106,063    7.88%    $ 91,922    7.94%   $ 66,671    6.62%     $ 47,800    5.42%
 Permanent 1 - 4 Family....  1,016,248   67.53      899,229   66.81      788,408   68.12     707,078   70.26       629,906   71.46
Multifamily...............      21,314    1.42       20,474    1.52       15,141    1.31      11,074    1.10        15,326    1.74
Nonresidential............     129,875    8.63      120,067    8.92       99,824    8.63      84,254    8.37        54,983    6.24
Land......................      51,196    3.40       54,731    4.07       41,882    3.62      27,562    2.75        33,182    3.76
                             ---------   -----    ---------   -----    ---------   -----     -------  ------       -------  ------
    Total Mortgage Loans..   1,338,281   88.93    1,200,564   89.20    1,037,177   89.62     896,639   89.10       781,197   88.62
                             ---------   -----    ---------   -----    ---------   -----     -------  ------       -------  ------
Other Loans
Commercial................      31,945    2.12       28,606    2.13       21,192    1.83      15,074    1.50        11,287    1.28
Consumer:
    Home Improvement......      24,973    1.66       21,636    1.61       17,205    1.49      19,016    1.89        20,614    2.34
    Manufactured
        Housing..........       14,607     .97       15,736    1.17       16,190    1.40      16,418    1.63        16,399    1.86

    Other Consumer (1)....      95,074    6.32       79,363    5.89       65,489    5.66      59,223    5.88        51,988    5.90
                               -------   -----      -------   -----      -------   -----     -------   -----       -------   -----
    Total Other Loans.....     166,599   11.07      145,341   10.80      120,076   10.38     109,731   10.90       100,288   11.38
                               -------   -----      -------   -----      -------   -----     -------   -----       -------   -----

Total Loans Receivable...    1,504,880  100.00%   1,345,905  100.00%   1,157,253  100.00%  1,006,370  100.00%      881,485  100.00%
                             ---------  ======    ---------  ======    ---------  ======   ---------  ======       -------  ======
Less:

Loans in process..........      84,777               77,074               70,722              46,152               32,078
Deferred loan fees and
    discounts..................  4,813                4,433                4,244               3,700                3,446
Allowance for loan losses.      13,417               12,729               11,952              11,818               11,691
                                ------               ------               ------              ------               ------
    Subtotal..............     103,007               94,236               86,918              61,670               47,215
                               -------               ------               ------          ----------               ------
Total Loans Receivable,
     Net..................   1,401,873            1,251,669            1,070,335             944,700              834,270
Loans Held for Sale.......       5,373                2,548                1,747                 714                  141
Mortgage-Backed
    Securities................ 153,714              165,059              196,971             201,049              176,854
                               -------              -------              -------             -------              -------
Total.....................  $1,560,960           $1,419,276           $1,269,053          $1,146,463           $1,011,265
                            ==========           ==========           ==========          ==========           ==========
</TABLE>

 (1)   Includes home equity and other second mortgage loans.

                                 ---------------



<PAGE>


       The following table shows the maturity or period to repricing of the
Company's loan and mortgage-backed securities portfolios at September 30, 2001.
Loans that have adjustable rates are shown as being due in the period in which
the interest rates are next subject to change. The table does not include
prepayments or scheduled principal amortization. Prepayments and scheduled
principal amortization on loans totaled $384.4, $286.2 and $278.0 million for
fiscal years 2001, 2000 and 1999, respectively. Loans having no stated maturity
and no schedule of repayments (including delinquent loans), and demand loans are
reported as due within one year.

<TABLE>
<CAPTION>
                                           One          Three        Five
                           Within         Through      Through      Through    Ten through   Beyond twenty
                          one year     three years    Five years   Ten years   twenty years       years          Total
                          --------     -----------  - ----------   ---------   ------------       -----          -----
                                                                 (In thousands)
Mortgage loans:
<S>                          <C>           <C>           <C>         <C>           <C>             <C>         <C>
  1 - 4 family............    $126,582      $61,582       $42,152     $78,751       $302,334        $453,452    $1,064,853
  Other...................      58,162       29,003        29,284      23,848         49,788           1,713       191,798
Other loans:
  Consumer ...............      40,864       15,196        29,160      31,161         17,804             339       134,524
  Commercial .............      19,193        5,020         5,884       1,555             64             ---        31,716
Nonperforming loans (1)...       2,585          ---           ---         ---            ---             ---         2,585
Mortgage-backed securities       8,573       11,011        17,547       8,331        108,252             ---       153,714
                              --------     --------      --------    --------       --------        --------    ----------
    Sub-total.............    $255,959     $121,812      $124,027    $143,646       $478,242        $455,504    $1,579,190
                              ========     ========      ========    ========       ========        ========
Deferred loan fees and
    discounts.............                                                                                         (4,813)
Allowance for loan losses.                                                                                        (13,417)
                                                                                                                  --------
Total (2)(3)..............                                                                                      $1,560,960
                                                                                                                ==========
</TABLE>


(1)  All  nonperforming  loans are reported as due within one year regardless of
     the actual maturity term.
(2)  Amounts  reported  do  not  include   principal   repayment  or  prepayment
     assumptions.
(3)  Amounts  include  loans held for sale of  $5,373,000 at September 30, 2001.
     --------------

       The following table sets forth the amount of fixed-rate and
adjustable-rate loans at September 30, 2001 due or repricing after September 30,
2002.

<TABLE>
<CAPTION>
                                                                  Adjustable
                                                 Fixed Rate        Rate             Total
                                                 ----------        ----             -----
                                                              (In thousands)
Mortgage loans:
<S>                                              <C>              <C>              <C>
  Permanent 1 - 4 family........................   $832,580         $105,691         $938,271
  Other.........................................     76,290           57,346          133,636
Other loans:
  Consumer .....................................     93,660              ---           93,660
  Commercial ...................................     12,523              ---           12,523
                                                 ----------         --------       ----------
Total loans.....................................  1,015,053          163,037        1,178,090
Mortgage-backed securities......................    145,141              ---          145,141
                                                 ----------         --------       ----------
Total........................................... $1,160,194         $163,037       $1,323,231
                                                 ==========         ========       ==========
</TABLE>



<PAGE>


       One-to-Four Family Permanent Residential Mortgage Loans. The Company's
primary lending activities focus on the origination of one-to-four family
residential mortgage loans. The Company generally does not originate one-to-four
family residential loans on properties outside of its market area. At September
30, 2001, $1.0 billion or 67.5% of the Company's total loan portfolio and 57.9%
of total assets consisted of one-to-four family loans.

       The Company's fixed rate loans generally are originated and underwritten
according to standards that permit sales in the secondary market. However, the
decision to sell depends on a number of factors including the yield and the term
of the loan, market conditions, and the Company's current portfolio position.
The Company sells a small portion of newly originated 15 and 30 year fixed rate
mortgage loans. In addition, the Company sells loans under the single family
Mortgage Revenue Bond Programs through local County Housing Finance Authorities.
The servicing on these loans is also released.

       The Company currently offers one-to-four family residential mortgage
loans with fixed, adjustable or a combination of fixed/adjustable interest
rates. Adjustable rate loans enable the Company to create a loan portfolio more
sensitive to fluctuating interest rates. Originations of fixed rate mortgage
loans versus ARM loans are monitored on an ongoing basis and are affected
significantly by the level of market interest rates, customer preference, the
Company's interest rate gap position, and loan products offered by the Company's
competitors. In a low interest rate environment, borrowers typically prefer
fixed rate loans to ARM loans, and even if management's strategy is to emphasize
ARM loans, market conditions may be such that there is greater demand for fixed
rate mortgage loans.

       The Company generates residential mortgage loan activity through local
advertising, its existing customers and referrals from local real estate brokers
and home builders. All loans are originated by Company loan officers, none of
whom have underwriting authority. Independent loan brokers are not used.

       Residential loans are authorized and approved under central authority by
experienced underwriters. Underwriters have individual authority to approve
loans up to the maximum amount of $350,000. Residential mortgage loans in excess
of this amount are approved by management individually up to $750,000 or by
committee if above $750,000. The Company also has direct endorsement authority
from the Federal Housing Authority ("FHA") to allow for internal approval of FHA
insured loans. FHA loans are approved under central authority by an underwriter
with a "Direct Endorsement" designation from the FHA. The Company's underwriting
standards are intended to ensure that borrowers are sufficiently credit worthy,
and all of the Company's lending is subject to written underwriting policies and
guidelines approved by the Company's Board of Directors. Detailed loan
applications are designed to determine the borrower's ability to repay the loan
and certain information solicited in these applications is verified through the
use of credit reports, financial statements and other confirmations. The Company
obtains an appraisal of substantially all of the proposed security property in
connection with residential mortgage loans. Additionally, title insurance is
required for all mortgage loans above $50,000.

       The types, amounts, terms of and security for conventional loans (those
not insured or guaranteed by the U.S. government or agencies thereof, or state
housing agencies) originated by the Company are significantly prescribed by
federal regulation. The Office of Thrift Supervision ("OTS") regulations limit
the amount which the Company can lend up to specified percentages of the value
of the real property securing the loan, as determined by an appraisal at the
time the loan is originated (referred to as "loan-to-value ratios"). The Company
makes one-to-four family home loans and other residential real estate loans with
loan-to-value ratios generally of up to 80% of the appraised value of the
security property. In certain circumstances loan-to-value ratios exceed 80%, in
which case private mortgage insurance is generally required. A substantial part
of the Company's loan originations are made to borrowers to finance second homes
for vacation use or for use as a rental property. Such loans may be considered
to have a higher credit risk than loans to finance a primary residence.

       One-to-Four Family Residential Construction Loans. A part of the
Company's loan originations are to finance the construction of one-to-four
family homes in the Company's market area. At September 30, 2001 the Company had
$119.6 million in such loans, representing 8.0% of total loans. It is the
Company's policy to disburse loan proceeds as construction progresses and as
inspections warrant.

       A portion of these loans is made directly to the individual who will
ultimately own and occupy the home. Of these, the vast majority are structured
at origination to guarantee the permanent financing to the Company as well. In
recent years the origination of these construction loans to individuals is
second in volume only to the origination of traditional loans to finance the
purchase or refinance of an existing home. However, the significance of this
type of lending to the Company is not evident from the amount of these loans in
its portfolio at any given time because these construction loans to individuals
usually "roll" into permanent financing.

       Consumer Loans. The Company originates consumer loans as an essential
element in its retail-oriented strategy. Secured consumer loans include
automobile, manufactured housing, boat and truck loans, home equity and home
improvement loans as well as loans secured by the borrower's deposit accounts
with the Company. The loans for manufactured housing are generally originated
within quality, retirement lifestyle communities spread throughout the six
county market area that feature amenities such as full service clubhouse
facilities, swimming pools, and, in a number of cases, golf courses. These loans
are subject to the normal underwriting standards of the Company. Loans are made
on either a fixed-rate or adjustable-rate basis, with terms generally up to 15
years. A limited amount of unsecured consumer loans are also originated. At
September 30, 2001, consumer-oriented loans accounted for $134.7 million or 9.0%
of the Company's total loan portfolio.

       Non-Residential and Land Mortgage Loans. In the late 1980's the Company
curtailed its lending in non-residential mortgages with the exception of loans
to finance the sale of the Company's real estate acquired through foreclosure.
In recent years, the Company re-entered this market and made a total of $30.7,
$37.1 and $34.7 million of non-residential mortgage loans in 2001, 2000 and
1999, respectively. At September 30, 2001, nonresidential loans constituted
$129.9 million or 8.6% of the Company's total loan portfolio. Origination of
these loans plays a subordinate role to the origination of residential mortgage
and consumer-related loans. Non-residential mortgage loans are offered on
properties within the Company's primary market area using both fixed or
adjustable rate programs.

       Loans secured by non-residential real estate generally carry larger
balances and involve a greater degree of risk than one-to-four family
residential mortgage loans. This increased risk is a result of several factors,
including the concentration of principal in a limited number of loans and
borrowers, the effects of general economic conditions on income-producing
properties, and the increased difficulty of evaluating and monitoring these
loans. Furthermore, the repayment of loans secured by non-residential property
is typically dependent upon the successful operation of the related real estate
project. If the cash flow from the project is reduced, the borrower's ability to
repay the loan may be impaired. See "Business -- Delinquent, Nonperforming and
Classified Assets."

       The Company also originates developed building lot loans ("lot loans")
secured by individual improved lots for future residential construction. Lot
loans are offered with either a fixed or adjustable interest rate and with a
maximum term of up to 15 years. At September 30, 2001 these loans accounted for
$22.4 million or 1.5% of the Company's total loan portfolio.

       Other Loans. The balance of the Company's lending consists of
multi-family mortgage and commercial loans. At September 30, 2001 these loans
represented $21.3 million or 1.4% and $31.9 million or 2.1%, respectively, of
the Company's total loan portfolio. The multi-family mortgage loans are secured
primarily by apartment complexes. These loans are subject to the same lending
limits as apply to the Company's commercial real estate lending. The commercial
loans represent primarily equipment and other business loans to professionals
such as physicians and attorneys. These loans are an integral part of the
Company's strategy of seeking synergy between its various deposit and loan
products and as a service to existing customers.

Origination and Sale of Loans

       From time to time the Company has sold mortgage loans, primarily to the
FNMA and the FHLMC. Historically, the Company has not purchased significant
amounts of loans.

       Presently, the Company sells conforming, newly originated, 15 and 30-year
fixed rate mortgage loans with servicing retained. In addition, the Company
sells loans under the single family Mortgage Revenue Bond Programs through local
County Housing Finance Authorities. The servicing on these loans is released,
which means the Company does not retain any administrative or collection
responsibilities in connection with the loans. The purpose of selling a portion
of fixed rate loans from current production is to reduce interest rate risk by
limiting the growth of longer term fixed rate loans in the portfolio and to
generate service fee income over time.



<PAGE>


       The following table shows total loan origination activity including
mortgage-backed securities, during the periods indicated.

<TABLE>
<CAPTION>
                                                                   Years Ended September 30,
                                                       2001                2000                1999
                                                       ----                ----                ----
                                                                      (In thousands)
Mortgage loans (gross):
<S>                                                  <C>                  <C>                 <C>
  At beginning of year (1)..............             $1,203,146           $1,038,954          $897,363
  Mortgage loans originated:
    Construction 1-4 Family.............                151,440              125,539           112,508
    Permanent 1-4 Family................                228,169              143,334           162,866
    Multi-family........................                  2,739                7,211             5,075
    Nonresidential......................                 30,746               37,063            34,726
    Land................................                 21,316               51,283            22,755
                                                     ----------           ----------        ----------
  Total mortgage loans originated (2)...                434,410              364,430           337,930
  Mortgage loans sold...................                (29,342)              (5,289)           (8,432)
  Principal repayments..................               (262,890)            (193,401)         (186,632)
  Mortgage loans transferred to real estate owned        (1,625)              (1,548)           (1,275)
                                                     ----------           ----------        ----------
  At end of year........................             $1,343,699           $1,203,146        $1,038,954
                                                     ==========           ==========        ==========
Other loans (gross):
  At beginning of year..................              $ 145,341             $120,076         $ 109,731
  Other loans originated................                143,631              118,446           101,949
  Principal repayments..................               (122,373)             (93,181)          (91,604)
                                                     ----------           ----------        ----------
  At end of year........................              $ 166,599             $145,341          $120,076
                                                      =========             ========          ========
Mortgage-backed securities (gross):
  At beginning of year..................               $165,059             $196,971          $201,049
  Mortgage-backed securities purchased..                 26,112                  ---            70,074
  Principal repayments..................                (37,457)             (31,912)          (74,152)
                                                     ----------           ----------        ----------
  At end of year........................               $153,714             $165,059          $196,971
                                                       ========             ========          ========
</TABLE>

 (1)        Includes loans held for sale.
 (2)        Loans originated represent loans closed, however all loans
            may not be fully disbursed at time of closing.
                              --------------------

Mortgage-backed Securities

       A substantial part of the Company's business involves investments in
mortgage-backed securities issued or guaranteed by an agency of the United
States government. Historically, the Company's mortgage-backed securities
portfolio has consisted primarily of pass-through mortgage participation
certificates issued by FHLMC and FNMA. These pass-through certificates represent
a participation interest in a pool of single-family mortgages, the principal and
interest payments on which are passed from the loans' originators, through the
FHLMC and FNMA that pools and packages the participation interests into the form
of securities, to investors such as the Company. The FHLMC and FNMA guarantee
the payment of principal and interest. The underlying pool of mortgages can
consist of either fixed-rate or adjustable-rate loans. At September 30, 2001,
the Company's portfolio of mortgage-backed securities consisted entirely of
FHLMC and FNMA participation certificates. Of the $153.7 million in
mortgage-backed securities at that date, approximately $6.5 million or 4.2%
represented adjustable-rate securities and $147.2 million or 95.8% represented
fixed-rate securities with anticipated maturity dates from 1 month to 26 years.

    Adjustable-rate mortgage-backed securities ("ARM Securities") have periodic
adjustments in the coupons based on the underlying mortgages. These periodic
coupon adjustments are subject to annual and lifetime caps. The caps serve as a
limit to the amount that the coupon will change during any coupon-reset period.
As interest rates on the mortgages underlying the ARM Securities are reset
periodically (one to 12 months), the yields on these securities will gradually
adjust to reflect changes in market rates. Management believes that the
adjustable-rate feature of ARM Securities will help to reduce sharp fluctuations
in security value that result from normal changes in interest rates.

    During periods of declining interest rates, the coupon on ARM Securities may
adjust downward, resulting in lower yields and reduced income from these
securities. Thus, ARM Securities may have less potential for capital
appreciation as compared to fixed-rate debt securities. During periods of rising
interest rates, the coupon on ARM Securities may not fully adjust upward in
conjunction with changes in market rates due to annual or lifetime coupon
adjustment caps. This could result in ARM Securities that depreciate in value
similar to long-term, fixed-rate mortgage securities in a rising interest rate
environment.

    The Company's fixed-rate mortgage-backed securities consist of both
long-term and balloon securities. The long-term securities have original
maturity terms of ten, fifteen and thirty years. The balloon securities have
principal and interest amortization based on a thirty-year maturity schedule
with final principal balloon payments due in five years or seven years from the
date of the security. Balloon mortgage-backed securities are held in the
portfolio as a means of reducing the average life of the fixed-rate portfolio. A
shorter average portfolio life will help reduce the interest rate risk
associated with these investments. As of September 30, 2001 long-term,
fixed-rate mortgage-backed securities amounted to $116.7 million and five-year
and seven-year balloon mortgage-backed securities amounted to $1.2 million and
$29.3 million, respectively.

    During periods of declining interest rates, fixed-rate mortgage-backed
securities may have accelerated principal reductions due to increased
refinancing activity on the underlying mortgage loans. The reinvestment of the
accelerated principal reductions at lower prevailing rates could result in lower
overall portfolio yields and income. During periods of rising interest rates,
fixed-rate mortgage-backed securities will tend to depreciate in value. Thus,
total returns on fixed-rate mortgage-backed securities are expected to decline
as market interest rates rise.

    If the Company purchases mortgage-backed securities at a premium,
accelerated principal repayments may result in some loss of principal investment
to the extent of the premium paid. Conversely, if mortgage-backed securities are
purchased at a discount, accelerated principal reductions will increase current
and total returns.

Delinquent, Nonperforming and Classified Assets

     Delinquent  Loans.  All delinquent loan results are reviewed monthly by the
Company's Board of Directors.  The Company believes it has an effective  process
and policy for dealing with delinquent loans.

       Residential delinquencies are handled by the Loan Collections Department.
This department begins collection efforts on residential loans when a loan
appears on the 15-day delinquent list. Borrowers are sent a notice to accelerate
the debt when the debt is 45 days delinquent. If the delinquent account has not
been corrected, foreclosure proceedings are begun generally at the 75th day of
delinquency. At September 30, 2001 residential loans delinquent 90 days and
longer represented 0.2% of the total residential loan portfolio.

       Commercial delinquent accounts are processed by the Special Asset and
Lending Departments. For commercial accounts classified as Substandard, as
defined below, or worse, the Special Asset Department has jurisdiction over the
collection efforts. As with residential delinquent loans, any commercial loans
90 days past due or where the collection of the interest or full principal is
considered doubtful are placed on a non-accrual basis.

       If a collection action is instituted on a consumer or commercial loan,
the Company, in compliance with the loan documents and the law, may repossess
and sell the collateral security for the loan through private sales or through
judicially ordered sales when necessary. Should the sale result in a deficiency
owing to the Company, the borrowers generally are pursued where such action is
deemed appropriate, including recourse based on personal loan guarantees by the
borrower's principals.


<PAGE>


       The following table shows the Company's loans delinquent 90 days or more
and loan delinquencies as a percent of total loans at the dates indicated.


<TABLE>
<CAPTION>
                                                              September 30,
                                             2001                 2000                    1999
                                             -----                -----                   ----
                                                            (Dollars in thousands)
                                          Number   Amount        Number  Amount      Number   Amount
                                          ------   ------        ------  ------      ------   ------
Mortgage loans:
<S>                                        <C>       <C>           <C>     <C>         <C>      <C>
  Construction and land...............       ---      $ ---         ---     $ ---       ---      $ ---
  Permanent 1 - 4 family..............        20      1,348          23     1,390        38      1,854
  Other mortgage......................         3        791           3       641         3        489
                                              --     ------          --    ------        --     ------
  Total mortgage loans................        23      2,139          26     2,031        41      2,343
Other loans...........................         9        183          12       230         9        198
                                              --     ------          --    ------        --     ------
Total loans...........................        32     $2,322          38    $2,261        50     $2,541
                                              ==     ======          ==    ======        ==     ======

Delinquent loans to total loans.......                 .18%                  .18%                 .24%
</TABLE>


       As of September 30, 2001, 2000 and 1999, $263,000, $505,000 and $0,
respectively, of loans were on nonaccrual status which were not 90 days past
due.

       Nonperforming Assets. The Company also places emphasis on improving asset
quality and asset quality has improved each year since 1996 when nonperforming
assets as a percentage of total assets was .50%. The Company's nonperforming
assets as a percentage of total assets has decreased slightly, from .23% at
September 30, 2000 to .20% at September 30, 2001.

       Loans 90 days past due are generally placed on non-accrual status. The
Company ceases to accrue interest on a loan once it is placed on non-accrual
status, and interest accrued but unpaid at that time is charged against interest
income. Additionally, any loan where it appears evident that the collection of
interest is in doubt is also placed on a non-accrual status. The investment in
impaired loans (primarily consisting of classified loans), other than those
evaluated collectively for impairment, at September 30, 2001 and 2000 was
$5,813,000 and $3,748,000, respectively. The average recorded investment in
impaired loans during the years ended September 30, 2001 and 2000 was
approximately $4,949,000 and $3,435,000, respectively. The total specific
allowance for loan losses related to these loans was $0 on September 30, 2001
and 2000. Interest income on impaired loans of approximately $437,000 and
$311,000 was recognized in the years ended September 30, 2001 and 2000,
respectively.

       If a foreclosure action is instituted on a real estate-secured loan and
the loan is not reinstated, paid in full, refinanced, or deeded back to the
Company, the property is sold at a foreclosure sale at which the Company may be
the buyer. Thereafter, such acquired property is listed in the Company's real
estate owned ("REO") account or that of a subsidiary, until the property is
sold. The Company carries REO at the lower of cost or fair value less cost to
dispose. The Company also finances the sales of REO properties. Should the
foreclosure sale not produce sufficient proceeds to pay the loan balance and
court costs, the Company's attorneys, where appropriate, may pursue the
collection of a deficiency judgment against the responsible borrower.

       It is the Company's policy to try to liquidate its holdings in REO on a
timely basis while considering both market conditions and the cost of carrying
REO properties. Upon acquisition the Company records all REO at the lower of its
fair value (less estimated costs to dispose), or cost. The fair value is based
upon the most recent appraisal and management's evaluation. If the fair value of
the asset is less than the loan balance outstanding, the difference is charged
against the Company's loan loss allowance prior to transferring the asset to
REO. Administration of REO property is handled by the Special Asset Department,
which is responsible for the sale of all residential and commercial properties.
In those instances where the property may be located outside the Company's
market area or where the property, due to its nature, requires certain expertise
(i.e., hotels, apartment complexes), outside management firms may be utilized.


<PAGE>


    At the dates indicated, nonperforming assets in the Company's portfolio were
as follows:


<TABLE>
<CAPTION>
                                                                      September 30,
                                             -------------------------------------------------------------------
                                                2001           2000          1999          1998            1997
                                                ----           ----          ----          ----            ----
                                                                 (Dollars in thousands)
Non-accrual mortgage loans:
<S>                                             <C>          <C>           <C>           <C>             <C>
  Delinquent less than 90 days.............     $  87        $  ---        $  ---        $  ---          $  ---
  Delinquent 90 days or more...............     2,139         2,031         2,343         1,880           2,416
                                               ------        ------        ------        ------          ------
     Total.................................     2,226         2,031         2,343         1,880           2,416
                                               ------        ------        ------        ------          ------
Non-accrual other loans:
  Delinquent less than 90 days.............       176           505           ---            25             ---
  Delinquent 90 days or more...............       183           230           198           542             164
                                               ------        ------        ------        ------          ------
     Total.................................       359           735           198           567             164
                                               ------        ------        ------        ------          ------
Total non-accrual loans....................     2,585         2,766         2,541         2,447           2,580
Accruing loans 90 days or more delinquent .       ---           ---           ---           ---             ---
                                               ------        ------        ------        ------          ------
  Total nonperforming loans................     2,585         2,766         2,541         2,447           2,580
                                               ------        ------        ------        ------          ------
Other nonperforming assets:
  Real estate owned........................       917           871           911         3,168           2,892
    Less allowance for losses..............       ---           ---           ---          (634)           (578)
                                               ------        ------        ------        ------          ------
      Total................................       917           871           911         2,534           2,314
                                               ------        ------        ------        ------          ------
Total nonperforming assets, net............    $3,502        $3,637        $3,452        $4,981          $4,894
                                               ======        ======        ======        ======          ======
Nonperforming loans to total net loans.....     0.18%         0.22%         0.24%         0.26%           0.31%
Total nonperforming assets to
  total assets.............................     0.20%         0.23%         0.24%         0.37%           0.43%
</TABLE>



       For the year ended September 30, 2001, interest income of $177,000 would
have been recorded on loans accounted for on a non-accrual basis if the loans
had been current throughout the period. No interest income was actually included
in net income regarding non-accrual loans during the same period.

       Management evaluates each REO property on no less than a quarterly basis
to assure that the net carrying value of the property on the Company's books is
no greater than the fair market value less estimated costs to dispose. When
necessary, the property is written down or specific allowances are established
to reduce the carrying value.

                                                 REO Allowances
                                              Years Ended September 30,
                                   --------------------------------------------
                                          2001          2000         1999
                                          ----          ----         ----
                                                  (In thousands)
Beginning balance....................     $---          $---         $634
Provision for (recovery of) losses...        4            25         (186)
Charge-offs..........................       (4)          (25)        (448)
                                         -----         -----        -----
Ending balance.......................    $ ---         $ ---        $ ---
                                         =====         =====        =====

       Provision for losses on REO is included in income (losses) from real
estate operations on the Company's consolidated statements of earnings.

       Not included in the preceding table are net gains, (losses) or recoveries
on the sale of real estate owned of $247,000, $271,000 and $207,000 for the
years ended September 30, 2001, 2000 and 1999, respectively.



<PAGE>


       Classified Assets. Under OTS regulations, problem assets of insured
institutions are classified as either "substandard," "doubtful" or "loss." An
asset is considered "substandard" if the current net worth and paying capacity
of the obligor and/or the value of the collateral pledged are no longer adequate
to support the loan. "Substandard" assets are characterized by the "distinct
possibility" that the insured institution will sustain "some loss" if the
deficiencies are not corrected. Assets classified as "doubtful" have all of the
weaknesses inherent in those classified "substandard," with the added
characteristic that the weaknesses present make "collection or liquidation in
full," on the basis of currently existing facts, conditions, and values, "highly
questionable and improbable." Assets classified "loss" are those considered
"uncollectible" and of such little value that their continuance as assets
without the establishment of a specific loss reserve is not warranted. In
addition to the classification of assets as "substandard," "doubtful" or "loss,"
the OTS regulations also require that assets that do not currently expose the
Company to a sufficient degree of risk to warrant one of the three foregoing
classifications but which do possess credit deficiencies or potential weaknesses
deserving management's close attention must be designated "special mention."

       When an insured institution classifies problem assets as either
substandard or doubtful, it is required to establish specific allowances for
loan losses in an amount considered appropriate by management. See "--Allowance
for Loan Losses" below. Additionally, the institution establishes general
allowances to recognize the inherent risk associated with lending activities,
but which, unlike specific allowances, have not been allocated to particular
problem assets. When an insured institution classifies problem assets as "loss,"
it is required either to establish a specific allowance for losses equal to 100%
of the amount of the asset so classified or to charge-off such amount. An
institution's determination as to the classification of its assets and the
amount of its valuation allowances is subject to review by the OTS, which can
order the establishment of additional general or specific loss allowances.

       The following table presents the Company's classified assets at the dates
indicated.


                                         September 30,
                                    2001        2000        1999
                                    ----        ----        ----
                                             (In thousands)
Substandard:
  Real Estate Owned.............    $ 917        $ 871      $ 911
  Loans.........................    5,098        4,580      5,180
                                   ------       ------     ------
    Total Substandard...........    6,015        5,451      6,091
Doubtful........................      229          ---        ---
Loss............................      ---          ---        ---
                                   ------       ------     ------
                                   $6,244       $5,451     $6,091
                                   ======       ======     ======



Allowance for Loan Losses

       Provisions for loan losses are charged to operations to establish an
allowance for loan losses; recognized loan losses (recoveries) are then charged
(credited) to the allowance. The Company evaluates the outstanding loan
portfolio with respect to the adequacy of the allowance for loan losses at least
quarterly.

       Management's policy is to provide for estimated losses on the Company's
loan portfolio based on management's evaluation of the probable losses (existing
and inherent). Such evaluations are made for all major loans on which full
collectibility of interest and/or principal may not be reasonably assured. The
factors that the Company considers are the estimated value of the underlying
collateral, the management of the borrower, and current operating results,
trends and cash flow. In addition to analyzing individual loans, management also
analyzes on a regular basis its asset classification and recent loss experience
on other loans to help insure that prudent general allowances are maintained on
one-to-four family loans, automobile loans and home equity loans. Management
periodically evaluates the allowance percentages utilized for general allowance
purposes based upon delinquencies, charge-off, underwriting, and other trends.

       The Company segregates the loan portfolio for loan loss purposes into the
following broad segments: commercial real estate, residential real estate,
commercial business and consumer loans.

       The Company provides for a general allowance for losses inherent in the
portfolio by the above categories, which consists of two components: (1) General
loss percentages are calculated based upon historical analyses. (2) A
supplemental portion of the allowance is calculated for inherent losses which
probably exist as of the evaluation date even though they might not have been
identified by the more objective processes used for the portion of the allowance
described above. This is due to the risk of error and/or inherent imprecision in
the process. This portion of the allowance is particularly subjective and
requires judgments based on qualitative factors which do not lend themselves to
exact mathematical calculations such as: trends in delinquencies and
nonaccruals; migration trends in the portfolio; trends in volume, terms, and
portfolio mix; new credit products and/or changes in the geographic distribution
of those products; changes in lending policies and procedures; loan review
reports on the efficacy of the risk identification process; changes in the
outlook for local, regional and national economic conditions; concentrations of
credit; and peer group comparisons.

       Specific allowances are provided in the event that the specific
collateral analysis on each classified loan indicates that the probable loss
upon liquidation of collateral would be in excess of the general percentage
allocation. The provision for loan losses is debited or credited in order to
state the allowance for loan losses to the required level as determined above.


<PAGE>



       The following tables set forth an analysis of the Company's allowance for
loan losses at the dates indicated.


<TABLE>
<CAPTION>
                                                                Years Ended September 30,
                                      ------------------------------------------------------------------------
                                       2001             2000           1999             1998           1997
                                       ----             ----           ----             ----           ----
                                                             (Dollars in thousands)
<S>                                   <C>              <C>            <C>              <C>            <C>
Balance at beginning of year...       $12,729          $11,952        $11,818          $11,691        $11,016
Provision for (recovery of)
     losses....................           798              847            816              297            782
Allowance for loan losses
    acquired................              ---              ---            ---              ---            ---
Charge-offs:
    Residential................           (20)             (75)           (22)            (259)           (43)
    Commercial real estate.....           ---              (30)           (49)             ---            (91)
    Consumer...................          (231)            (125)          (324)            (213)          (125)
    Other......................          (102)              (3)          (367)            (102)            (3)
                                      -------          -------        -------          -------        -------
       Total charge-offs.......          (353)            (233)          (762)            (574)          (262)

Recoveries:
    Residential................            25               40             39               86             44
    Commercial real estate.....           ---               39             21                2             19
    Consumer...................            21               70             14               16             62
    Other......................           197               14              6              300             30
                                      -------          -------        -------          -------        -------
       Total recoveries........           243              163             80              404            155

Balance at end of year.........       $13,417          $12,729        $11,952          $11,818        $11,691
                                      =======          =======        =======          =======        =======
Allowance for loan losses to total
    loans......................          .96%            1.02%          1.12%            1.25%          1.40%
Allowance for loan losses to  total
    non-performing loans.......       519.01%          460.19%        470.31%          483.13%        453.11%
Allowance for loan losses and
    allowance for REO to total non-
    performing assets..........       383.09%          350.02%        346.20%          221.80%        224.21%
Net charge-offs (recoveries) to
    average loans outstanding during
    the period.................          .01%            0.01%          0.07%            0.02%          0.01%
Classified loans to total net loans      .38%            0.37%          0.48%            0.59%          1.19%
</TABLE>




<PAGE>



       The following table presents an allocation of the entire allowance for
loan losses among various loan classifications and sets forth the percentage of
loans in each category to total loans. The allowance shown in the table should
not be interpreted as an indication that charge-offs in future periods will
occur in these amounts or proportions or that the analysis indicates future
charge-off trends.


<TABLE>
<CAPTION>
                                                                                               September 30,
                       -----------------------------------------------------------------------------------------------------------
                                   2001               2000                   1999                 1998                    1997
                                   ----               ----                   ----                 ----                    ----
                                   % of Loans         % of Loans              % of Loans           % of Loans            % of Loans
                                    in Each            in Each                 in Each              in Each               in Each
                                    Category to        Category to             Category to          Category to          Category to
                           Amount   Total Loans Amount Total Loans    Amount   Total Loans  Amount  Total Loans  Amount  Total Loans
                           ------   ----------- ------ ------------   ------   -----------  ------  ------------ ------   ----------
Allowance at end of                                                (Dollars in thousands)
  period applicable to:
<S>                        <C>         <C>     <C>        <C>       <C>          <C>      <C>         <C>        <C>         <C>
Residential...........     $ 3,177     75.48%  $ 2,820    74.69%    $ 2,605      76.06%   $ 2,251     76.88%     $ 2,141     76.88%
Commercial real estate       5,931     13.45     6,192    14.51       6,142      13.56      5,986     12.22        6,487     11.74
Consumer .............       2,786      8.95     2,432     8.67       2,128       8.55      2,310      9.40        2,068     10.10
Commercial business...       1,523      2.12     1,285     2.13       1,077       1.83      1,271      1.50          995      1.28
                           -------    ------   -------   ------     -------     ------    -------    ------      -------    ------
    Total.............     $13,417    100.00%  $12,729   100.00%    $11,952     100.00%   $11,818    100.00%     $11,691    100.00%
                            ======    ======    ======   ======      ======     ======     ======    ======       ======    ======
                                                          ------------------
</TABLE>


Investment Activities

       The Company invests primarily in overnight funds, U.S. Government and
agency obligations, and Federal Home Loan Bank of Atlanta capital stock. The
Company does not invest in derivatives, collateralized mortgage obligations or
other hedging instruments.

       The table below summarizes the carrying value and estimated market value
of the Company's portfolio of investment securities at the dates indicated.


<TABLE>
<CAPTION>
                                                         September 30,
                                                         -------------
                                    2001                      2000                        1999
                                    -----                     -----                       ----
                                                            (In thousands)
                             Carrying         Market       Carrying       Market       Carrying       Market
                               Value          Value          Value        Value         Value          Value
                               -----          -----          -----        -----         -----          -----
  Available for sale:
<S>                            <C>            <C>           <C>            <C>          <C>           <C>
    FHLB notes..........       $30,991        $30,991       $59,299        $59,299      $49,502       $49,502
    FNMA notes..........           ---            ---        19,939         19,939       19,875        19,875
    FHLMC notes.........        10,458         10,458           ---            ---          ---           ---
    Equity securities...         4,965          4,965         6,529          6,529        6,789         6,789
                               -------        -------       -------        -------      -------       -------
        Total                  $46,414        $46,414       $85,767        $85,767      $76,166       $76,166
                                ======         ======        ======         ======       ======        ======
  Held to maturity:

    FHLB notes..........           ---            ---           ---            ---        9,995         9,992
    Municipal securities           200            220           200            200          915           852
                               -------        -------       -------        -------      -------       -------
        Total...........     $     200      $     220     $     200      $     200      $10,910       $10,844
                              ========       ========      ========       ========       ======        ======

  FHLB stock............       $15,027        $15,027       $12,500        $12,500      $11,250       $11,250
</TABLE>


      The table below presents the contractual maturities and weighted average
yields of investment securities at September 30, 2001 excluding FHLB stock and
equity securities. Yields on tax exempt obligations are not reported on a tax
equivalent basis.


<TABLE>
<CAPTION>
                                                                                                  Total Investment
                  One Year or Less     One to Five Years       More Than Five Years                  Securities
                  ----------------     -----------------       --------------------   ----------------------------------------
                                                                                     Average
                            Weighted               Weighted              Weighted   Remaining                          Weighted
                 Carrying   Average    Carrying    Average    Carrying   Average     Years to    Carrying    Market     Average
                  Value      Yield       Value      Yield      Value      Yield      Maturity     Value      Value       Yield
                  -----      -----       -----      -----      -----      -----      --------     -----      -----       -----
                                                              (Dollars in thousands)
<S>               <C>         <C>         <C>        <C>          <C>     <C>           <C>        <C>        <C>         <C>
  FHLB Notes      $ 10,175    6.00%       $20,816    6.47%        $ ---     ---         1.1        $30,991    $30,991     6.32%
  FHLMC Notes          ---     ---         10,458    5.21           ---     ---         1.8         10,458     10,458     5.21
  Municipal
  Securities           ---     ---            ---     ---           200    7.40        12.1            200        220     7.40
</TABLE>

                                                 ------------------


Sources of Funds

     Deposits. The Company offers a number of different deposit accounts,
including regular savings, interest-bearing checking or NOW accounts,
non-interest checking, money market accounts, term certificate accounts and
individual retirement accounts.

     The Company has twenty-nine full-service banking offices and one in-store
branch location in addition to its home office in Fort Pierce. The Company's
strategy has been to have conveniently located offices in growth markets as one
of its main methods of attracting funds. The Company's deposits primarily are
obtained from areas surrounding its offices. Certificate accounts in excess of
$100,000 are not actively solicited nor are brokers used to obtain deposits.

     During the year ended September 30, 2000, the Company began offering
internet banking services. This new online service allows customers the ability
to access their accounts through any computer terminal that has internet browser
capabilities, using secure technology. Customers benefit by having access to
their accounts and being able to initiate transactions at the time that suits
them best. The Company also offers a bill pay service.

     The Company had a decline in deposit balances for several years prior to
1993. This was a strategy that the Company used to improve its capital ratios.
Much of the decline was accomplished by the closing of less profitable branches.
With the Company's improved capital position in the beginning of 1993, it made
an effort to stabilize deposits and increase account balances. As part of this
strategy, the Company has upgraded a number of branch facilities and moved from
leased storefronts to full service free-standing offices.

      Management believes that demand and passbook accounts are less sensitive
to changes in interest rates than other types of accounts, such as certificates
of deposit. As of September 30, 2001 the Company had 35.61% of its deposits in
passbook and demand accounts, 63.06% in certificates of deposit and 1.33% in
official checks. When management determines the levels of its deposit rates,
consideration is given to local competition, U.S. Treasury securities offerings,
and anticipated funding requirements.

<PAGE>



     The following table sets forth the distribution of the Company's deposit
accounts at the dates indicated and the weighted average interest rates on each
category of deposits presented. Management does not believe that the use of
year-end balances instead of average monthly balances produces any material
difference in the information presented:


<TABLE>
<CAPTION>
                                                                                September 30,
                                                2001                               2000                            1999
                                                -----                              -----                           ----
                                                        Weighted                            Weighted                       Weighted
                                                         Average                             Average                        Average
                                                         Nominal                             Nominal                        Nominal
                                   Amount      Percent    Rate       Amount      Percent      Rate      Amount    Percent    Rate
                                   ------      -------    ----       ------      -------      ----      ------    -------    ----
                                                                       (Dollars in thousands)
 <S>                               <C>          <C>      <C>     <C>            <C>          <C>       <C>          <C>      <C>
     Demand accounts:
        Non-interest
         Bearing demand            $ 122,115    10.17%    N/A      $102,534       9.33%       N/A      $ 76,176       7.79%   N/A
        NOW accounts                  80,342     6.69      .50%      70,881       6.45         .74%      66,184       6.77   1.09%
        Money market accounts        128,454    10.71     2.54       95,223       8.67        4.49       43,015       4.40   2.49
                                  ----------   ------     ----   ----------      -----        ----      --------    ------   ----
       Subtotal                      330,911    27.57     1.11      268,638      24.45        1.79       185,375     18.96    .97
      Savings accounts:
        Passbook                      96,516     8.04     1.05       95,431       8.69        1.58       108,508     11.10   1.97
      Certificates of deposit        756,727    63.06     5.43      722,739      65.79        5.84       671,281     68.67   5.03
      Official checks                 15,938     1.33      N/A       11,729       1.07         N/A        12,431      1.27   N/A
                                  ----------   ------     ----   ----------     ------        ----      --------    ------   ----
        Total deposits            $1,200,092   100.00%    3.81   $1,098,537     100.00%       4.42%     $977,595    100.00%  3.86%
                                  ==========   ======     ====   ==========     ======        ====      ========    ======   ====
</TABLE>


    The following table sets forth the Company's certificates of deposit
classified by rates as of the dates indicated.


                                              September 30,
                              --------------------------------------------
                                  2001            2000             1999
                                  ----            ----             ----
                                         (Dollars in thousands)
  0.00 - 3.00%.............     $ 10,875           $ 103            $ 128
  3.01 - 4.00%.............       90,812           5,081           11,275
  4.01 - 5.00%.............      181,100         124,393          335,421
  5.01 - 6.00%.............      183,727         300,063          298,720
  6.01 - 7.00%.............      282,215         279,215           25,361
  7.01 - 8.00%.............        7,980          13,866              376
  8.01 - 9.00%.............           18              18              ---
                                --------        --------         --------
Total Certificate Accounts.     $756,727        $722,739         $671,281
                                ========        ========         ========


<PAGE>


    At September 30, 2001, the Company had certificates of deposit in amounts of
$100,000 or more maturing as follows:



Maturity Period                                 Amount
---------------                                 ------
                          (In thousands)
3 Months or Less.............................  $26,051
Over 3 to 6 Months...........................   20,278
Over 6 to 12 Months..........................   30,854
Over 12 Months...............................   31,238
                                                ------
Total........................................ $108,421
                                              ========

    The following table contains information regarding deposit account activity
for the periods shown.


<TABLE>
<CAPTION>
                                                                 Years Ended September 30,
                                                 ---------------------------------------------------
                                                      2001                2000             1999
                                                      ----                ----             ----
                                                                  (Dollars in thousands)
<S>                                               <C>                 <C>                 <C>
Net increase (decrease) before interest credited  $ 57,748            $ 83,446            $ 25,933
Interest credited                                   43,807              37,496              33,536
                                                  --------            --------             -------
Deposit account increase                          $101,555            $120,942             $59,469
                                                  ========            ========             =======

Weighted average cost of deposits during the year    4.34%               4.07%               3.96%

Weighted average cost of deposits at end of year     3.81%               4.42%               3.86%
</TABLE>



      Borrowings. The Company is a member of the Federal Home Loan Bank of
Atlanta ("FHLB of Atlanta"). The FHLB of Atlanta offers various fixed rate and
variable rate advances to its members. The FHLB of Atlanta underwrites each
advance request based on factors such as adequacy and stability of capital
position, quality and composition of assets, liquidity management, level of
borrowings from all sources and other such factors. Pursuant to a collateral
agreement with the FHLB, advances are secured by all stock in the FHLB and a
blanket floating lien that requires the Company to maintain qualifying first
mortgage loans as pledged collateral in an amount equal to, when discounted at
75% of the unpaid principal balances, the advances.

      As of September 30, 2001, the Company had $295.5 million of outstanding
FHLB advances. Of this amount, $285.5 million have maturity dates of sixteen
months or longer. The remaining $10 million of FHLB advances are short-term,
with maturity dates of twelve months or less. Of the $285.5 million long-term
FHLB advances, the FHLB could call $85 million on specified dates in 2003, $60
million on specified dates in 2005 and $75 million on specified dates in 2006.

      As of September 30, 2001, the Company had a total credit limit of $437.8
million and an availability limit of $142.3 million with the FHLB of Atlanta.

      In addition to FHLB advances, the Company had $151.4 million of unpledged
mortgage-backed securities at September 30, 2001. These unpledged
mortgage-backed securities could be used as collateral under reverse repurchase
transactions with various security dealers. Such borrowing transactions could
provide additional cash and liquidity to the Company in the event of sudden or
unforeseen deposit withdrawals.

      The Company recognizes the maturity characteristics of its time deposit
portfolio. Management believes that unused FHLB advances and other borrowing
sources would provide sufficient funding for potential deposit withdrawals.



<PAGE>


      The following table sets forth information regarding the Company's
borrowing at and for the periods indicated:


<TABLE>
<CAPTION>
                                                                            At or for the Year Ended September 30,
                                                                            --------------------------------------
                                                                                     2001          2000     1999
                                                                                     ----          ----     ----
                                                                                    (Dollars in thousands)
<S>                                                                               <C>          <C>          <C>
      FHLB Advances:
             Average Balance............................                          $266,340     $232,917     $197,767
             Maximum balance at any month-end...........                           295,544      247,000      225,000
             Balance at year end........................                           295,544      238,000      225,000
             Weighted average interest rate during the year                          5.56%        5.67%        5.62%
             Weighted average interest rate at year end.                             5.40%        5.64%        5.56%
       Other Borrowings:
             Average Balance............................                            $  69         $  16       $  ---
             Maximum balance at any month-end...........                               91            99          ---
             Balance at year end........................                               43            91          ---
             Weighted average interest rate during the year                         18.84%       35.15%          ---
             Weighted average interest rate at year end.                             8.00%        8.00%          ---
       Total Borrowings:
             Average Balance............................                          $266,409     $232,933     $197,767
             Maximum balance at any month-end...........                           295,587      247,099      225,000
             Balance at year end........................                           295,587      238,091      225,000
             Weighted average interest rate during the year                          5.57%        5.67%        5.62%
             Weighted average interest rate at year end.                             5.40%        5.64%        5.56%
                                                   ---------------
</TABLE>

Subsidiaries

      Federal associations generally may invest up to 2% of their assets in
service corporations plus an additional 1% of assets for community purposes. In
addition, federal associations such as the Bank may invest up to 50% of their
regulatory capital in conforming loans to service corporations. In addition to
investments in service corporations, federal associations are permitted to
invest an unlimited amount in operating subsidiaries engaged solely in
activities that a federal association may engage in directly.

     The Bank has four active subsidiary corporations.  Appraisal Analysts, Inc.
provides real estate appraisal services to the Bank as well as third parties. H.
F.  Development  Company,  Inc. serves as a repository for some of the Company's
commercial REO  properties  held for  disposition.  See "Business -- Delinquent,
Nonperforming and Classified Assets".  Harbor Insurance Agency, Inc. specializes
in  property  and  casualty  insurance  and  provides a full range of  insurance
products to its customers.  (See Note 17 to Consolidated Financial Statements on
page 52 in the Annual Report).  Harbor Florida Financial  Services,  Inc. offers
non-deposit investment products for sale through the Bank's branch offices.

Competition

      The Company encounters strong competition both in attracting deposits and
in originating real estate and consumer loans. Its most direct competition for
deposits has come historically from commercial banks, brokerage houses, other
savings associations and credit unions in its market area. The Company expects
continued strong competition from such financial institutions in the foreseeable
future. The Company's market area includes branches of a number of commercial
banks that are substantially larger than the Company in terms of statewide
deposits. The Company competes for deposits by offering depositors a high level
of personal service, convenient locations and competitive interest rates.

      The competition for real estate and other loans comes principally from
commercial banks, mortgage banking companies and other savings associations.
Lending competition has increased substantially in recent years, as a result of
the large number of institutions seeking to benefit from the growth in the
Company's market area.


<PAGE>


      The Company competes for loans primarily through the interest rates and
loan fees it charges, the types of loans it offers, and the efficiency and
quality of services it provides borrowers, real estate brokers and builders.
Factors that affect competition include general and local economic conditions,
current interest rate levels and volatility of the mortgage markets. Based on
total assets, as of September 30, 2001, the Company was the largest savings
institution headquartered in the six county area served by the Company.

Employees

      At September 30, 2001, the Company had a total of 454 full-time and 51
part-time employees, none of whom were represented by a collective bargaining
unit. The Company considers its relations with its employees to be good.

Financial Services Modernization Bill

      On November 12, 1999, President Clinton signed into law the
Gramm-Leach-Bliley-Financial Services Modernization Act of 1999 (the "Act"),
federal legislation intended to modernize the financial services industry by
establishing a comprehensive framework to permit affiliations among commercial
banks, insurance companies, securities firms and other financial service
providers. Generally, the Act: (i) repeals the historical restrictions and
eliminates many federal and state law barriers to affiliations among banks,
securities firms, insurance companies and other financial service providers;
(ii) provides a uniform framework for the functional regulation of the
activities of banks, savings institutions and their holding companies; (iii)
broadens the activities that may be conducted by national banks, banking
subsidiaries of bank holding companies and their financial subsidiaries; (iv)
provides an enhanced framework for protecting the privacy of consumer
information; (v) adopts a number of provisions related to the capitalization,
membership, corporate governance and other measures designed to modernize the
Federal Home Loan Bank system; (vi) modifies the laws governing the
implementation of the Community Reinvestment Act; and (vii) addresses a variety
of other legal and regulatory issues affecting day-to-day operations and
long-term activities of financial institutions.

      Thrift holding companies such as the Company will be permitted to engage
in financial activities in the same manner as bank holding companies with
respect to insurance and securities activities. In addition, in a change from
prior law, thrift holding companies can be owned, controlled or acquired only by
companies engaged in financially-related activities.

      The Company does not believe that the Act has had a material adverse
effect on its operations. However, to the extent that the Act has permitted
banks, securities firms and insurance companies to affiliate, the financial
services industry may experience further consolidation. This could result in a
growing number of larger financial institutions that can offer a wider variety
of financial services than the Company currently offers and that can
aggressively compete in the markets the Company currently serves.

Item 2.  Properties

      The Company conducts its business from its headquarters in Fort Pierce and
through 29 full-service banking offices, one loan production office, one
in-store branch location and two insurance agency locations. These offices are
located in Brevard, Indian River, Martin, Okeechobee, St. Lucie, and Volusia
counties, Florida. The net book value at September 30, 2001 of the Company's
offices was $18.3 million. The following table sets forth information regarding
the Company's offices.


<TABLE>
<CAPTION>
                                                       Year                                          Lease
                 Location                             Opened           Owned/Leased             Expiration Date
                 --------                             ------           ------------             ---------------


ST. LUCIE COUNTY

<S>                                                  <C>                  <C>                    <C>
MAIN OFFICE                                          1934                 OWNED
100 SOUTH SECOND STREET
FORT PIERCE, FL 34950

VIRGINIA AVENUE                                      1968                 OWNED
500 VIRGINIA AVENUE
FORT PIERCE, FL 34950

PSL MAIN                                             1975                 OWNED
7181 SOUTH U.S. #1
PORT ST. LUCIE, FL 34952

H.F. CENTER                                          1981                 OWNED
2400 S.E. MIDPORT RD., SUITE 100
PORT ST. LUCIE, FL 34952

LAKEWOOD PARK                                        1981                 OWNED
5100 TURNPIKE FEEDER RD.
FORT PIERCE, FL 34951

DARWIN SQUARE                                        1991                 OWNED
3201 S.W. PSL BLVD.
PORT ST. LUCIE, FL 34953

ORANGE BLOSSOM                                       1984                 OWNED
4156 OKEECHOBEE ROAD
FORT PIERCE, FL 34947

ST. LUCIE WEST                                       1993                 OWNED
1320 S.W. ST. LUCIE WEST BLVD.
PORT ST. LUCIE, FL 34986

HARBOR INSURANCE AGENCY, INC.
2222 COLONIAL ROAD                                   2000                 LEASED                    01/14/06
SUITE 100
FORT PIERCE, FL 34982


INDIAN RIVER

VERO MAIN                                            1973                 OWNED
655 21st STREET
VERO BEACH, FL 32960

CAUSEWAY                                             1981                 OWNED
1700 S.A1A
VERO BEACH, FL 32963

INDIAN RIVER MALL                                    1997                 OWNED
6080 20TH ST.
VERO BEACH, FL 32966

SEBASTIAN                                            1979                 OWNED
13397 U.S. HIGHWAY #1
SEBASTIAN, FL 32958

WEST SEBASTIAN                                       1998                 OWNED
993 FELLSMERE ROAD
SEBASTIAN, FL 32958

HARBOR INSURANCE AGENCY, INC.                        2001                 LEASED                    03/31/04
RYANWOOD SQUARE SHOPPING CTR.
2168 58TH AVENUE
VERO BEACH, FL  32966


<PAGE>




MARTIN COUNTY

PALM CITY                                            1978                 LEASED                    07/26/05
1251 S.W. 27TH STREET
PALM CITY, FL  34990

EAST OCEAN                                           1981                 OWNED
1500 E. OCEAN BLVD.
STUART, FL 34996

STUART MAIN                                          1996                 LEASED                    08/14/03
789 S. FEDERAL HWY.
STUART, FL 34994

JENSEN BEACH                                         1999                 LEASED                    04/30/02
3639 NW FEDERAL HWY.
JENSEN BEACH, FL  34957

BREVARD COUNTY

PALM BAY                                             1981                 OWNED
5295 BABCOCK ST., N.E.
PALM BAY, FL 32905

INDIALANTIC                                          1981                 OWNED
305 5th AVENUE
INDIALANTIC, FL 32903

WEST MELBOURNE                                       1982                 OWNED
2950 W. NEW HAVEN AVENUE
MELBOURNE, FL 32904

VIERA                                                1995                 OWNED
100 CAPRON TRAIL
MELBOURNE, FL  32940

WAL-MART                                             1998                 LEASED                    08/31/03
1000 N  WICKHAM ROAD
MELBOURNE, FL 32935

PALM BAY WEST                                        2001                 OWNED
122 MALABAR ROAD, S.W.
PALM BAY, FL 32907

ROCKLEDGE                                            2001                 OWNED
630 BARNES BOULEVARD
ROCKLEDGE, FL  32955

LOAN PRODUCTION OFFICE                               1998                 LEASED                    07/31/02
1355 N COURTENAY PARKWAY
   SUITE I
MERRITT ISLAND, FL 32953

OKEECHOBEE COUNTY

OKEECHOBEE                                           1980                 OWNED
2801 HIGHWAY #441 SOUTH
OKEECHOBEE, FL 34974


<PAGE>




VOLUSIA COUNTY

NEW SMYRNA BEACH                                     1988                 OWNED
2230 STATE ROAD #44
NEW SMYRNA BEACH, FL 32168

PORT ORANGE                                          1983                 OWNED
4035 NOVA ROAD
PORT ORANGE, FL 32127

ORMOND BEACH                                         1984                 OWNED
75 N. NOVA ROAD
ORMOND BEACH, FL 32174

DELTONA                                              1998                 OWNED
2901 HOWLAND BOULEVARD
DELTONA, FL 32725

DELAND
312 N. WOODLAND BOULEVARD                            1999                 OWNED
DELAND, FL  32720

ORMOND BY THE SEA
1190 OCEAN SHORE BOULEVARD                           1999                 OWNED
ORMOND BEACH, FL  32176
</TABLE>


      All leases are anticipated to renew upon their expiration.

      The Company uses a data processing service located in Milwaukee, Wisconsin
for record keeping activities. The data processor specializes in servicing
financial institutions. The Company's current contract expires in 2006. All data
processing equipment that is used internally by the Company is owned by the
Company. The net book value of such data processing equipment and related
software as of September 30, 2001 was $3,504,000.


Item 3.  Legal Proceedings

      There are various claims and lawsuits in which the Company is periodically
involved incident to the Company's business. In the opinion of management, no
material loss is anticipated from any such pending claims or lawsuits.

Item 4.  Submission of Matters to a Vote of Security-Holders.

      None.


                                                       PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

      The Company's common stock trades on the NASDAQ National Market under the
symbol HARB. The approximate number of shareholders of record and beneficial
shareholders of the common stock at December 7, 2001 was 7,600, some of which
are street name holders.

      The Company paid $0.3875 in cash dividends per share for the twelve months
ended in fiscal 2001. Payments were $0.0875 in the first quarter and $0.1000 in
the second, third and fourth quarters. The Company currently expects that
comparable cash dividends will continue to be paid in the future.

      On December 7, 2001 the closing sales price of the Company's common stock
was $16.23 per share. The following table sets forth the market price range of
the high and low closing sales price per share of common stock as reported by
the NASDAQ stock market for the four quarters of fiscal years 2001 and 2000.


                                                    Low                High
                                                    ---                ----
FISCAL 2001

   First Quarter................                   $11.63             $14.94
   Second Quarter ..............                    14.00              16.38
   Third Quarter................                    15.47              19.15
   Fourth Quarter...............                    16.56              19.98

FISCAL 2000

   First Quarter................                   $11.81             $13.75
   Second Quarter ..............                    10.06              12.56
   Third Quarter................                     9.94              11.31
   Fourth Quarter...............                    10.50              12.19


Item 6. Selected Financial Data.

      The information contained in the table captioned "Selected Consolidated
Financial Data" in the Annual Report on pages 13-14 is incorporated herein by
reference.

Item 7.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations.

      The information contained in the section captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" on
pages 14 through 24 in the Annual Report is incorporated herein by reference.

Item 7A.  Quantitative and Qualitative Disclosures about Market Risk

      The information contained in the sections captioned "Disclosure on
Quantitative and Qualitative Market Risk and Asset and Liability Management",
"Interest Rate Sensitivity", "Interest Rate Risk" and "Equity Pricing Risk" is
contained on pages 15 through 17 in the Annual Report and is incorporated herein
by reference.

Item 8.  Financial Statements and Supplementary Data

      The Company's consolidated financial statements listed in Item 14 herein,
together with the report thereon by KPMG LLP, are found in the Annual Report on
pages 25 through 56 and incorporated herein by reference.


Item 9.  Changes in and Disagreements with Accountants on Accounting and
         Financial Disclosure.

      None.



                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

      The information contained under the sections captioned "Beneficial
Ownership of Common Stock," on pages 2 through 4 and "Section 16(A) Beneficial
Ownership Reporting Compliances" on page 14 of the Proxy Statement of Harbor
Florida Bancshares, Inc. (the "Proxy Statement) filed with the SEC on December
14, 2001 is incorporated herein by reference.



Item 11.  Executive Compensation.

      The information contained under the sections captioned "Executive
Compensation" on pages 9 through 13 of the Proxy Statement filed with the SEC on
December 14, 2001 is incorporated herein by reference.



Item 12.  Security Ownership of Certain Beneficial Owners and Management.

   (a)  Security Ownership of Certain Beneficial Owners

      The information required by this item under the sections captioned "Voting
Securities" on pages 1 through 2 and "Beneficial Ownership of Common Stock" on
pages 2 through 4 of the Proxy Statement filed with the SEC on December 14, 2001
is incorporated herein by reference.


   (b)  Security Ownership of Management

      The information required by this item under the section captioned
"Beneficial Ownership of Common Stock" on pages 2 through 4 of the Proxy
Statement filed with the SEC on December 14, 2001 is incorporated herein by
reference.


   (c)  Changes in Control

      Management of the Company knows of no arrangements, including any pledge
by any persons of securities of the Company, the operation of which may, at a
subsequent date, result in a change in control of the Registrant.


Item 13.  Certain Relations and Related Transactions

      The information required by this item under the sections captioned "Voting
Securities" on pages 1 through 2, "Beneficial Ownership of Common Stock" on
pages 2 through 4 and "Certain Transactions" on page 13 of the Proxy Statement
filed with the SEC on December 14, 2001 is incorporated herein by reference.




<PAGE>


                                     PART IV

Item 14.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K.

   (a)Documents filed as a part of this Report:

   (1) The Consolidated Financial Statements of the Registrant as listed below
(See Exhibit 13):

<TABLE>
<CAPTION>
                                                                                      Pages in Annual
                                                                                          Report
                                                                                          ------
<S>                                                                                        <C>
   Independent Auditors' Report                                                            25
   Consolidated Statements of Financial Condition                                          26
   Consolidated Statements of Earnings                                                     27
   Consolidated Statements of Stockholders' Equity and Comprehensive
     Income                                                                                28
   Consolidated Statements of Cash Flows                                                   30
   Notes to Consolidated Financial Statements                                              32
</TABLE>

   (2) The Consolidated Financial Statement Schedules of the Registrant as
   required to be filed in this Report are either not applicable or are included
   elsewhere in this Report.

    (3) Exhibit Index

      The exhibits listed below are included with this Report or are
incorporated herein by reference to an identified document previously filed with
the Securities and Exchange Commission as set forth parenthetically.

3(i)      *  Certificate  of  Incorporation   of  Registrant   (Exhibit  3.3  to
          Pre-effective  Amendment No. 1 to the  Registration  Statement on Form
          S-1, No. 333-37275 filed November 10, 1997).

3(ii)*    Bylaws of Registrant. (Exhibit 3.4 to Pre-Effective Amendment No. 1 to
          the Registration Statement on Form S-1, No. 333-37275,  filed November
          10, 1997).

10(i)*    Employment  contract with Michael J. Brown,  Sr. (Exhibit 10(a) to the
          Registration Statement on Form S-4 filed December 20, 1996)

10(ii)    * 1994 Incentive Stock Option Plan (Exhibit 10(b) to the  Registration
          Statement on Form S-4 filed December 20, 1996)

10(iii)   * 1994 Stock Option Plan for Outside  Directors  (Exhibit 10(c) to the
          Registration Statement on Form S-4 filed December 20, 1996)

10(iv)    * Harbor Federal Savings Bank Non-Employee  Directors' Retirement Plan
          (Exhibit 10(vi) to Form 10-Q for the quarter ended June 30, 1997 filed
     August 11, 1997)

10(v)*    Unfunded Deferred  Compensation Plan for Directors (Exhibit 10(vii) to
          Form 10-K for the year ended  September  30, 1998 filed  December  24,
          1998)

10(vi)    *1998 Stock  Incentive  Plan for  Directors,  Officers  and  Employees
          (Exhibit 4.3 to the  Registration  Statement on Form S-8 filed October
          26, 1998)

10(vii)   * Change of Control  Agreements  (Exhibit 10(vii) to Form 10-K for the
          year ended September 30, 2000 filed December 29, 2000)

13        * Excerpts from the 2001 Annual Report to Shareholders filed herewith.
          Such Annual Report except for those portions specifically incorporated
          by reference is furnished to the SEC for information purposes only and
          should not be deemed to be filed.

21        Subsidiaries of the Registrant

99        * Proxy  Statement for the 2001 Annual Meeting of  Shareholders  filed
          with the SEC on December 14, 2001

(b)   Reports on Form 8-K

      None.


      * Incorporated by reference


<PAGE>


                                   SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                                                 HARBOR FLORIDA BANCSHARES, INC.

                                                            (Registrant)



Dated: December 27, 2001           By:              /s/
                                   -------------------------------------------
                                   Michael J. Brown, Sr.
                                   President and Chief Executive
                                   Officer and Director

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the date indicated.


             /s/                                  December 27, 2001
---------------------------------------------
Michael J. Brown, Sr.
President, Chief Executive
Officer and Director


             /s/                                  December 27, 2001
---------------------------------------------
Don W. Bebber
Senior Vice President, Finance
(Principal Financial and Accounting Officer)

              /s/                                 December 27, 2001
---------------------------------------------
Bruce R. Abernethy, Sr., Director


               /s/                                December 27, 2001
----------------------------------------------
Richard N. Bird, Director


              /s/                                 December 27, 2001
---------------------------------------------
Edward G. Enns, Director


              /s/                                 December 27, 2001
---------------------------------------------
Frank H. Fee, III, Director


              /s/                                 December 27, 2001
---------------------------------------------
Richard B. Hellstrom, Director


              /s/                                 December 27, 2001
---------------------------------------------
Richard V. Neill, Sr., Director


<PAGE>


                                   EXHIBIT 21

                         SUBSIDIARIES OF THE REGISTRANT


   The Registrant has one wholly-owned subsidiary corporation, the Bank, and the
Bank has eight wholly-owned subsidiary corporations. Each is a Florida
corporation.

1. Appraisal Analysts, Inc.

2. H. F. Development Company, Inc.

3. Indigo Tree, Inc. (inactive)

4. The Palm Bay Inn Corporation (inactive)

5. Highland Communities, Inc. (inactive)

6. CFD, Inc. (inactive)

7. Harbor Insurance Agency, Inc.

8. Harbor Florida Financial Services, Inc.